Can Banking Intermediates Crowd Out Their High‐Tech Promising Successors? A Financial Stress Perspective

ABSTRACT This study looks into the dynamic nexus of financial stress with major US banks and major high‐tech firms that aspire to be their successors. Using weekly data from 3 January 2017 to 20 September 2024 and the Quantile‐VAR (QVAR) framework, the net pairwise directional connectedness, the extended joint connectedness, and the dynamic network nexus are examined. Findings reveal that technology giants are far more closely linked to financial stress than banks, and this is even more profound in bear markets and, even in bull markets, due to high inflation and geopolitical instability, which intensifies when new wars break out. This is the first study that employs the Financial Stress Index and the QVAR model to detect and measure the size of impacts that financial conditions exert under inflationary pressures on financial disintermediation and the transition to the new cashless economy. This informs policymakers and investors that tech giants will play a bigger role in the financial system when new crises arise, and they will gradually push to replace or merge with systemic banks.